LAW ALERT: Transparency in Damages and House Bill 837 / Senate Bill 236 | March 16, 2023
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Important Law Alert From Luks and Santaniello, LLC.
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Transparency in Damages and House Bill 837 / Senate Bill 236 by Laurette Balinsky, Senior Partner
On the eve of what could be the most significant tort reform Florida has seen in decades, Luks & Santaniello partners have provided critical testimony before the Florida Legislature in support of needed change. House Bill 837 was proposed in mid-February, and one important provision seeks to change the scope of permissible evidence in an effort to “level the playing field” between personal injury plaintiffs and defendants. This article provides an overview of the “Transparency in Damages” provision, and reaction by proponents and opposition on the House floor. It concludes by highlighting the ways our firm already ensures “Transparency in Damages” by attacking unscrupulous doctors and clinics involved in questionable practices under letters of protection.
House Bill 837 / Senate Bill 236– Overview of Significant Proposed Changes
F.S. 90.502: In its original form, HB 837 drew a line for communications between a lawyer and a client for legal advice, and those communications between a lawyer and a client for the sole purpose of referrals to medical professionals for purposes of litigation. This portion of HB 837 sought to amend the Evidence Code to state, “There is no lawyer-client privilege under this section when (f) A communication is relevant to the lawyer’s act of referring the client for treatment by a health care provider.” When HB 837 moved to the Senate as SB 236, this provision was modified and shifted to the end of proposed F.S. 768.0427.
Under this new provision, F.S. 768.0427(3)(e), carves out an exception to the “attorney-client privilege” in referring a client to a physician or clinic. In its current form, SB 236 requires disclosure of the use of Letters of Protection, and requires disclosure of “(e) Whether the claimant was referred for treatment under a letter of protection (LOP) and, if so, the identity of the person who made the referral. If the referral is made by the claimant’s attorney, disclosure of the referral is permitted, and evidence of such referral is admissible notwithstanding s. 90.502.” Subsection (e) goes on to state, “…in such situation, the financial relationship between a law firm and a medical provider, including the number of referrals, frequency, and financial benefit obtained, is relevant to the issue of the bias of a testifying medical provider.” This is significant, as defense counsel would not be prohibited from inquiring as to this referral practice in deposition and during trial. Plaintiffs’ attorneys would no longer be permitted to hide behind a privilege for these referrals under Worley v. Central Florida Young Men’s Christian Association, 228 So. 3d 18 (Fla. 2017). In practice, this change would allow the defense to expose the well-known cozy relationships between plaintiffs’ personal injury attorneys and their go-to doctors and clinics, and tell the jury the truth, instead of allowing plaintiffs to hide behind a privilege for communications that clearly do not involve legal advice. As one of our defense colleagues states, “They never taught us how to refer clients to doctors in law school.”
F.S. 768.0427: The current form of proposed SB 236 would add Section 768.0427 regarding the “[a]dmissibility of evidence to prove medical expenses in personal injury or wrongful death actions; disclosures of letters of protection; recovery of past and future medical expenses damages.” This new provision would define “factoring” of medical bills. Factoring involves the sale of the provider’s medical bill or accounts receivable for an amount significantly less (usually the reasonable value of the service) to a third party, in exchange for the third party’s right to collect. This is a way of inflating boardable medical bills at trial and the practice has gone on for decades; this is the first time it would be addressed in any tort statute.
“Letter of Protection” would also be defined as “any arrangement by which a health care provider renders treatment in exchange for a promise of payment for the claimant’s medical expenses from any judgment or settlement of a personal injury or wrongful death action. The term includes any such arrangement, regardless of whether referred to as a letter of protection.” This is significant as doctors routinely attempt to circumvent case law allowing bias evidence in cases involving letters of protection by creatively calling the document something else, such as a “forbearance agreement” or “patient financial agreement,” or “financial policy,” yet the document serves the exact same purpose as a “letter of protection” by granting a lien to the clinic on any proceeds from a settlement, verdict, or judgment.
Section (2)(a) seeks to curtail excessive, grossly inflated medical bills by limiting evidence of damages at trial to “evidence of the amount actually paid, regardless of the source of payment.” Section 2(b)(4) prevents introduction of the inflated amount in the case of factoring, and limits evidence to the amount the provider was paid for the bill when the treatment is obtained under a letter of protection. This provision has the Plaintiffs’ Bar and doctors who grossly inflate medical bills nervous; this addition, if codified, will directly impact their wallet. If the doctor’s bills boarded at trial are limited to payments only, the doctor no longer benefits from setting their charges at some arbitrary, offensive amount that bears no relationship to the value of the service. That, in turn, would preclude Plaintiffs’ attorneys from receiving 33% or 40% of the grossly inflated, higher amount at the sacrifice of their client who may be recommended for a procedure that is not needed, or was not caused by the negligence of the defendant. In a more recent amendment to SB 236, Subsection (5) was added to allow “[a]ny evidence of reasonable amounts billed to the claimant for medically necessary treatment or medically necessary services provided to the claimant.”
Section (3)(b) seeks to require doctors and facilities engaged in the above practices under letters of protection to utilize CPT codes, which is a coding system created by the American Medical Association. All too frequently, doctors and clinics fail to code their bills in LOP cases, though they are very familiar with CPT codes and coding practices. Why? Not specifically identifying procedures according to AMA guides, unbundling procedures, and upcoding leads to higher, inflated, and improper bills. In practice, requiring the use of CPT codes and proper coding practices leads to more uniform billing practices (already required when submitting bills to third party payers and Medicare), and bills which more accurately reflect the reasonable value of the service(s) provided.
There are other proposed amendments which specifically allow introduction of Medicare and Medicaid allowed amounts and reimbursement rates, 120% and 170%, respectively, under certain circumstances. These amendments are discussed briefly below.
Finally, just prior to the February 24, 2023, House Civil Justice Subcommittee meeting, another amendment was added, seeking to change our current statute of limitations for tort actions. Currently, Florida has a four-year statute of limitations to bring personal injury actions. The proposed amendment seeks to limit the timeframe for bringing tort causes of action to two years. The proposed two-year statute of limitations has survived and remains in SB 236 in its current form.
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Initial Comment by Plaintiffs’ Bar and Defense Bar
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Our Attorneys Janine Menendez-Aponte, Esq. and Angelise Petrillo, Esq., attended the February 24, 2023 House Civil Justice Subcommittee meeting and provided testimony in support of the “Transparency in Damages” provision.
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Attorneys Laurette Balinsky, Esq. and Frank Pierce, Esq. testified before the House Judiciary Committee Meeting on March 8, 2023, as well as the more recent Senate Judiciary Meeting on March 14, 2023 in support of the Bill. Proponents of the Bill cited to the clear need for change in response to grossly inflated claims, fraudulent claims and billing practices, unnecessary surgeries, and back door agreements with medical providers for the sole purpose of inflated (and offensive) claims in personal injury cases. This practice, which has been in play for quite some time, results in more litigation, higher costs, fraud, and inflated verdicts and settlements. The result directly and adversely impacts all citizens of Florida, resulting in increasing, costly insurance premiums which many individuals and small businesses can no longer afford.
Opponents cite to issues with presentation of Medicare reimbursement rates to juries. First, opponents assert that introduction of the low reimbursement rates could in effect drive doctors out of business or put a strain on personal injury plaintiffs if doctors no longer want to treat injury patients for bottom of the barrel rates. They assert that their clients will no longer be able to find care or “quality” care. Moreover, opponents question the continued existence of Medicare, and codifying the amendment in its current form only creates more problems if Medicare ceased to exist.
The answer? Simply something needs to change, of that there is no doubt.
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Senior Partner and Co-Chair of the Surgical LOP Abuse Team
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"We are in favor of this Bill because transparency and accountability is needed for all citizens in the State of Florida."
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Senior Partner and President of the Florida Defense Lawyers Association
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“This portion of Bill 236 will greatly help prevent the artificial inflation of medical damages in litigation that ends up not actually being paid by anyone. The bill will allow juries to see what doctors and facilities actually accept as payments for their medical treatments.”
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Strategic Mentoring and Training Partner
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"Transparency at the end of the day equals truth."
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What We Are Doing… Now
Regardless of the outcome of this legislative session, and whether this is codified into law, we will continue to fight the fight to expose the truth. Indeed, juries are entitled to the truth, the whole truth, and nothing but the truth. The Plaintiffs’ Bar is well informed of these practices; why does everyone in the courtroom know except for the jury?
We are, for lack of a better phrase, “bringing it” to the doctors, clinics, and facilities engaged in the behind the scenes practices aimed at unnecessarily and improperly inflating medical expenses in personal injury cases. Our Surgical LOP Abuse Team fights to expose the truth, to allow the jury to take look behind the curtain and see what is really going on.
Bringing it to the Docs, and Bringing Results. Our aggressive discovery efforts expose what is actually going on behind the scenes, and the back door agreements and deals between doctors, referring attorneys, clinics, and facilities. This discovery shines a light on the grossly inflated billing and what the providers actually accept at the end of the day - in full satisfaction of the gross charges. We have also been able to expose the fact that surgical recommendations, whether needed or not, related or not, result in more money in the pockets of those involved, yet (interestingly) not necessarily the plaintiff. Indeed, many clinics concede in deposition what is well-known by the Plaintiffs’ Bar-- the grossly inflated charges are more often than not reduced to 10-50% of the gross charge.
Many cases settle after the clinic and facility representatives testify as to their reduction practices. In some cases, our attorneys have exposed fraudulent and/or improper billing/coding practices during depositions, resulting in line items and portions of bills being cut during the deposition. More recently, after being confronted with lack of adequate supporting documentation for certain charges, a clinic cut multiple line items during the deposition. In a case involving factoring and improper referral practices, where the Plaintiff’s surgeon/clinic purchased the medical bills of a surgical facility and anesthesia provider, the surgeon/clinic mid-deposition agreed to reduce the amount it sought to collect from Plaintiff by more than $75,000. This was obviously devastating to the Plaintiff’s excessive, inflated damages claim in that case.
In a case we recently tried in Brevard County, Florida, Plaintiff’s surgeon admitted to ownership interests in his own clinic, the MRI facility where Plaintiff was referred, as well as the surgery center where surgery was performed, though the latter was not disclosed to the patient. This information was confirmed during the surgeon’s 30(b)(6) deposition prior to trial. Clearly, the jury was offended since all of the surgeon’s (a/k/a the “triple dipper”) bills were omitted from the Plaintiff’s verdict, where Plaintiff asked for $750,000.00, but received a mere $48k.
Luks & Santaniello's Tort Reform Committee will continue to monitor and provide relevant updates throughout the 2023 legislative session. For questions or further assistance, please contact our Surgical LOP Abuse Practice Chairs, Managing Partner Daniel Santaniello and Senior Partner Laurette Balinsky.
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Laurette Balinsky, Esq.
T: (407) 218-4968
E: LBalinsky@insurancedefense.net
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Daniel J. Santaniello, Esq.
T: (561) 226-2525
E: DJS@insurancedefense.net
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About Luks, Santaniello, Petrillo, Cohen & Peterfriend
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Our verdicts tell the story.™ Luks, Santaniello, Petrillo, Cohen & Peterfriend is a Florida Corporate & Insurance Defense Litigation firm. The firm defends professionals, corporations and their insurance companies from both Liability and Workers' Compensation claims. From our eleven Florida offices in Key West, Miami, Fort Lauderdale, Boca Raton, Stuart, Fort Myers, Tampa, Orlando, Jacksonville, Tallahassee and Pensacola, the firm’s 145+ attorneys deliver counsel and legal services in over 33 practice areas. The firm has several strategic and innovative practice areas including a dedicated Time and Policy Limit Demands and Tenders Practice Group, a Surgical LOP Abuse Practice and an SIU Fraud Special Investigations Practice that handle a number of specialized issues. Members have tried over 200 cases in Florida State and Federal Courts.
Our mission is to provide our clients with legal services that help them manage risk and reduce exposure. Our goal is to ensure that our clients obtain equal justice in the courtroom. The Law Firm is Peer Review Rated by Martindale-Hubbell and is a member of The Gavel.net LLC., Nationwide Claims Defense Network. The firm's Partners are members of the Trucking Industry Defense Association (TIDA), the Florida Defense Lawyers Association (FDLA), the Defense Research Institute (DRI) and the Claims and Litigation Management Alliance (CLM).
Managing Partner Dan Santaniello, Esq., Partners Anthony Petrillo, Esq. (Tampa), James Sparkman, Esq. (Boca Raton), Jack Frost (Boca Raton), Gary Ralph, Esq. (Fort Myers) and Nash John Hedrick, Esq. (Orlando) are Florida Bar Board Certified Civil Trial Experts. Construction Law Partners Ashley Graham, Esq. (Fort Myers), Hayley Newman, Esq. (Boca Raton), Valerie Edwards, Esq. (Boca Raton), Christopher Burrows, Esq. (Boca Raton), C. Eric Bearden, Esq. (Jacksonville), Patrick Hinchey, Esq. (Jacksonville) and David Harrigan, Esq. (Orlando) are Florida Bar Board Certified Construction Law Experts. The firm has a full service Appellate team in South, Central and Northern Florida to assist with summary judgments, motions in limine, discovery objectives, trial strategy and post trial positions.
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Contact:
Luks, Santaniello, Petrillo, Cohen & Peterfriend
T: (561) 226-2525
E: DJS@insurancedefense.net
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Luks, Santaniello, Petrillo, Cohen & Peterfriend
T: 954.847.2936
E: MDonnelly@insurancedefense.net
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